What you need to know about Contract Jobs

[Md. Anikuzzaman]

Most surprising things you may not know about contract jobs:

1. Almost every company from Fortune 1000 down to small startups hire contractors. At many large companies, contractors constitute upto 50% of the workforce and recent surveys by Freelancer Union and MBO Partners have said 35% of the US workforce considers themselves freelancers. According to McKinsey and Accenture, this contingent worker ratio is expected to go upto 50% by the end of this decade.

2. Large Fortune 1000 hiring also called Client companies - like Apple, Citibank or FedEx never hire contractors directly - because of liability of getting sued and cost reasons as it is very cumbersome to search, screen and employ these workers that they would rather focus their HR on the more core long term positions they need to fill. So large companies always use staffing agencies or consulting companies as middlemen to find and hire contractors.

3. People often assume that HR hires contractors and this is wrong. The hiring company's HR and Full-time Recruiters most of the times don't know about these contract jobs' existence because contract job hiring is usually managed by Procurement Departments rather than HR.

4. Client or Hiring Companies never post contract jobs on their career websites, since the recruiting for these jobs is done by the staffing agency, so don't expect to see these jobs on Indeed or Monster. This is the biggest reason why most people don't know of the existence of these contract jobs. People assume it is impossible to get a job at Google or Apple. If you know about how contracting works, the key staffing vendors and recruiters, there are tons of jobs at these companies that you can easily get. At the entry low skill level- dishwasher, driver, event staff, etc, mid skilled translators and testers and even high skill and high paying software designer and consultant jobs. You just have to know how to find the best staffing agency for you.

5. Staffing companies never post all their job openings on job boards. It is too expensive, time consuming and they don't have the time to go through hundreds of unqualified applications, so they usually do the searching themselves and reach out to job seekers. (see the problem this can cause if you haven't made yourself discoverable?)

6. On the other hand, many jobs posted by staffing agencies are not real (there's no law against this- although there should be!). They are often 'fishing' for candidates to populate their candidate pipeline for a future job openings.

7. Interviews for contract jobs are relatively easy to clear. They usually comprise of a telephonic screening followed by 1-2 hrs of in-person interviews at the client's office with the hiring manager. You don't need a degree from an Ivy league or top tier company experience to be selected and is the most common way for peopel to get their foot in the door.

8. When you get a contract job, you will be on the payroll of the staffing agency and not the client. You will be a W2 (salaried) employee of the staffing agency but will be working at the client site, reporting to the Client company's manager. Your interaction with the staffing agency will be minimal to nil. some clients require the staffing agency to check in on you once in 3 months so thats probably what you can expect- a friendly drop-in visit or lunch with your recruiter/account rep.

9. You don't get the of the benefits that full-time employees of the hiring company get. You are not eligible for the client company's stock options, healthcare benefits, vacation, and other benefits like 401k. Remember, this is one of the reasons you were not hired as a full-time employee- these benefits are expensive.

10. You may get healthcare benefits from the staffing agencies but you have to ask for it. Some staffing agencies offer vacations that you earn as you work (e.g. 1 day per month worked), and 401k plans that the company matches your contribution only after 6 or 12 months. You have to ask or negotiate for these benefits- you don't get them automatically. If you work on a 1099 or corp-corp basis with the staffing agency, you don't get ANY benefits from the staffing agency as you are considered an independent contractor and not an employee.

11. Client's hiring managers are restricted from treating contractors like fulltime employees because their HR and Procurement Depts have warned them not to do so for legal reasons. They worry doing so may lead the contractor to mistakenly believe they are equal to full-time employees and may later come and sue them saying they did the same work but were discriminated against for benefits. This is the reason why contractors are often not invited to morale events or all-hands meetings, etc. Your manager is not being a dick, he's just following policy and could face problems if he broke those rules. As a contractor, you don't get a formal performance reviews from your manager (same reason- should not appear like the manager was managing you). The staffing agency might get feedback from the Manager and pass it along to you.

12. Clients are also restricted from imparting training or providing equipment to contractors, so your staffing agency would usually provide you a loaner laptop or phone.

13. Many client companies have different ID badges for contractors with different colors or different email ids to distinguish them from full-time employees.

14. Term Limits- Most companies limit their contractors to 12-18 months projects at a stretch and then require the contractors to take a 3-6 month break.

15. Duration- Even though contract jobs may list a term of 6 or 12 months, it is quite common for a company to terminate the contract early for a multitude of reasons such as budget cuts, direction change, unhappiness over your fit for the job, etc.

16. Termination Notice- Some Managers will give you a 2 week notice. Some Managers – especially if they are firing you, and worried you could cause some trouble, may let you go immediately. This is usually done by calling the account manager of your staffing company and telling them to inform you by phone or they may ask the account manager to come and escort you out of the building at the end of the day.

17. Many contractors have their projects extended year after year. To avoid co-employment risks, client companies structure the work as projects, also called Statement of Work where they say the work is based on deliverables and not specifically tied to you. Many contractors also convert into full-time employees at the client company. Not well-known, but a significant portion of temps convert into full-time employees at the same clients.

18. Hiring contractors as 1099 independent contractors is risky. Smaller companies are OK with hiring contractors on 1099 as independent contractors, but larger client companies and staffing companies don't allow it because of the risk of an IRS audit that could find they misclassified the worker as a 1099 instead of as an employee and having to pay backtaxes.

19. Contractors can also incorporate a company (LLC, etc.) and work as if they are a company. This is called a Corp-Corp contract. Most client and staffing companies prefer this to 1099 as the burden of tax reporting falls on your company. As a self-employed worker you have to pay both the employer and employee portion of taxes ~20% on your billing rate as compared to 10% if you were just a salaried employee.

20. Contract jobs often pay higher because the company doesnt have to pay any benefits. The duration of the contract is also short and uncertain, so contractors demand and often get more.

21. As a contractor you can negotiate your salary only with the staffing agency- not with the client. The staffing agency gets your desired rate, then adds a markup on top of your rate to cover their cost and profit and bills the client at a higher hourly rate. Neither the client nor the staffing agency will tell you the client's bill rate because they worry you might demand more if you see the billing rate. See this rate calculator to understand how contractor rates are determined by staffing agencies

Source: https://www.oncontracting.com/article/what-you-dont-know-about-contract-1099-ic-jobs.html